Startup (Photo: ShutterStock)
Treat development like manufacturing
In an article published in Harvard Business Magazine by Stefan Thomke and consultant Donald Reinertsen, the two argued that although many companies treat product development as if it were similar to manufacturing, they are two very different processes.
On an assembly line, tasks are repetitive, actions are predictable, and the items created can only be in one place at a time. In contrast, in product development many tasks are unique, requirements change frequently, and the output is information (software, designs, charts), which can be found in several places simultaneously. Ignoring these critical differences leads to failures that impair product development planning and execution.
One of the failures presented in the article is the approach according to which maximum utilization of resources will maximize performance. Most companies strive to exert their full product development resources. Surveys of executive courses at the California Institute of Technology found that the average product development manager maintains capacity utilization above 98%.
On the face of it, it seems logical, the more we work, the faster we will reach the marketing and sales stage. But in practice, this explanation does not stand the test of reality. 100% capacity erodes quality, efficiency and even speed of output.
This is because in manufacturing processes, the aspects of work are predictable: if you add 30% work, it will take 30% of the time to complete it. But in product development it is difficult to predict what will happen, you may add another 30% work, and it will take 90% of the time to complete.
For example, we may want to increase a certain capacity of a medical device, but find that it increases the radiation it emits. Such unexpected malfunctions require us to allocate resources and time to reach a solution before we can proceed to production.
High utilization of resources inevitably creates queues of projects, that is, partially completed work and "waiting" for employees to be available. These queues extend the overall project duration, delay feedback processes, and make it difficult for companies to adapt to evolving market needs and identify product weaknesses and problems. As mentioned, in product development early detection of problems and weaknesses is critical, you do not want to invest time and money in a particular feature/material/design, only to discover in the middle of the process that they are ineffective/usable.
The queue can contain developers in the company who are waiting for each other because of interdependence, or teams that have received incorrect information. It may create delays in completing a task and technical challenges. The solution to this is to leave a time interval that will allow maneuvering.
Google is famous for its rule, which allows engineers to work one day a week on whatever they want — allowing additional capacity available 20% of the time (one day out of five working days) if a project is behind schedule.
No market fit is detected
The process of finding a product market fit is complicated and challenging. Developers are forced to rely on a jumble of intuitions, data, feedback, and signs. The assessment of all these factors is critical and often determines the future of the product. This is true for both physical and digital goods.
The case of Twitch is a classic example of this. The platform was originally launched in 2007 under the name Justin.tv, intended to be a live streaming site in various content categories. This broad approach diluted its focus and prevented it from attracting a specific target audience. Justin.tv failed to stand out from other streaming platforms and lacked a clear identity. Therefore, it failed to gain momentum and faced monetization difficulties.
In 2011, the platform underwent a rebranding in which it reduced its focus to live streaming. This move has proven to be Game Changer. Twitch took advantage of the growing popularity of esports, allowing users to not only watch their favorite games but also chat with streamers in real time. This unique interactive experience attracted gamers and led to the rise of Twitch. Its adaptability has made it a successful platform, with annual revenue estimated at $2022.2 billion in 8 alone.
How do you know if a product needs to "change direction?" or if it's on the right track? There are several signs that the market is suitable for the product:
Unexpected and positive traffic – If users react to the product in unexpected ways, this can be a good sign. Inquiries and even suggestions on how to improve your product are often clear signs that you've piqued interest. Suggesting improvement is an indication of engagement.
Monetization – Not all products have a monetization mechanism in the early stages, but if your product is built on the assumption that someone will pay for it, check their willingness to do so. If it exists, it is a positive signal.
Growth – If your numbers change in the trend you're aiming for (sales, interest level, number of subscribers, etc.) this is a strong sign that you may be achieving market alignment.
On the other hand, one of the red flags worth paying attention to is: "polite liars." This refers to reviews like: 'It looks great, I can imagine anyone would be interested in it – but not me' – listen carefully to customers who tell you how great your solution is but isn't right for them, and ask them why.
You grabbed a multiple, you didn't catch at all
Let's go back to the Harvard University article. Another failure noted there is the loading of features on the product. Many product managers believe that the more features they put into a product, the more customers will like it. That's why ovens have so many cooking programs, computers have endless settings, and new cars have a quantity of features that wouldn't put a cockpit to shame.
But the truth is that even in product development, beauty is simply. The customer wants the product to solve his problems and not create additional "headaches" for him. In order to simplify the product, focus on two areas:
Defining the problem – formulating the problem that developers will try to solve is a critical step. This is when teams develop a clear understanding of what their goals are and come up with hypotheses that can be tested and refined through experiments. The quality of the problem setting is significant for the ability of staff to focus on the features that really matter.
Knowing how to "cut" or hide complexity - the natural tendency of developers is to show off the brilliant technological solutions they have worked on. The truth is, customers will often prefer a product that is perceived as simple and effortless.
From the customer's point of view, the best solutions solve a problem in the simplest way, so you don't pay attention to all the complex work that developers are so proud of.
In a way, developing a product is similar to editing a movie: there are many interesting ideas and materials, and determining what to omit is just as important as what to include. But unfortunately for developers (and consumers), many companies throw in every possible feature regardless of important factors like customer value and ease of use, just out of a desire to be perceived as innovative. When such companies already omit any features, it is usually due to cost or schedule considerations.
Managers need to focus on each feature: Will it really improve the product? If the answer is no, delete it. That way, they can let the team focus on the things that really improve the customer experience. The test is carried out in relation to the requirement of the product: what problems it comes to answer. This can be tested in small, quick experiments with customers from the potential target audience.
Development teams often assume that their products are perfect when no more features can be added. Harvard experts say the opposite is true: products approach perfection when features can no longer be removed.
Aside from the many logistical, technological, and financial challenges, one of the reasons products fail is misconceptions. The ability to identify and analyze misconceptions at the very beginning of the product development process is critical, and is often what makes the difference between success and failure. Especially now, when we will see a new market for AI-based startups growing rapidly, it is important to pay attention and identify the failures ahead of time. This is true not only for entrepreneurs and product managers, but also for investors who want to invest in new developments.
Adv. Reut Goldman is the CEO of the Geometrics Group and an expert in innovation and technology, a member of the Helsinki Committee at Beilinson Hospital, and a member of the Board of Directors of the Trustees of Schneider Children's Hospital
- Marketing & Digital
- Knowledge Bank
- Research & Development
- Business Management